European lawmaker urges EU to step up crypto monitoring following FTX collapse

• The European Union is set to provide a final vote on the Markets in Crypto-Assets (MiCA) regulation proposal.
• FTX contagion led to the crypto lending platform BlockFi filing for bankruptcy.
• BlockFi also sued FTX’s founder Sam Bankman-Fried for holding Robinhood shares pledged as collateral.

FTX’s downfall impacted the crypto market not just financially but also brought regulatory concerns to a new height. With every passing day, more and more lawmakers are demanding crypto regulation, with the most recent addition calling upon the European Union to take appropriate actions.

FTX collapse to make crypto space safer

FTX’s bankruptcy came days after the crypto exchange and its native token, FTT, imploded. This led to one of the biggest crashes noted in the history of the crypto market, the aftershocks of which can still be felt. Regarding the same, the Chair of the Economic and Monetary Affairs Committee of the European Parliament, Irene Tinagli, shared her concerns. In an interview with Bloomberg, the lawmaker stated,

“We need to be very carefully monitoring what is going on, and try to put in place regulation that would prevent that to blow up out of proportion and to become a systemic threat.”

Suggesting appropriate regulations, Tinagli called upon the European Union to step their crypto monitoring up. This would enable them to prevent a crisis like the collapse of FTX, which could have an impact on the broader market.

However, the European Union is yet to implement regulations for the space. The closest the EU is to present regulations is through the Markets in Crypto-Assets or MiCA proposal, which is set for a final vote in February 2023. If approved, MiCA would look upon addressing service providers’ supervision, consumer protection and environmental safeguards from energy-intensive cryptocurrencies such as Bitcoin.

BlockFi files for bankruptcy and sues SBF over collateral

FTX collapse’s blowback continues to impact crypto companies, with BlockFi emerging as the newest addition to the list. The crypto lender filed for Chapter 11 bankruptcy on Monday, the same as FTX, following the suspension of withdrawals. As per the press release, BlockFi will be taking this time to restructure the company and continue operations as it has over 100,000 creditors. 

In addition to this, BlockFi also sued the former CEO of FTX, Sam Bankman-Fried’s (SBF) Emergent Fidelity Technologies, to seize Robinhood Shares that the FTX founder allegedly pledged as collateral to BlockFi.

According to an FT report, BlockFi and Emergent Fidelity Technologies reached an agreement on November 9 to guarantee the payment of a borrower – that, according to legal correspondence, turned out to be Alameda Research – by pledging Robinhood’s shares as security. 

BlockFi also claims its exposure to SBF and associated companies ultimately triggered the company’s breakdown as Alameda Research defaulted on $680 million of collateralized loans in early November.

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